By Rory Gallivan

LONDON--Illustrated book publisher Quarto Group Inc. (QRT.LN) Tuesday reported a fall in first-half profit and revenue following the collapse of one of its U.S. distributors and weak sales of new titles in traditional book stores.

The publisher of titles such as "1001 Movies You Must See Before You Die" reported sales of $65.6 million for the half year ended June 30, down from $72.2 million over the same period the previous year. Pretax profit excluding the benefit of one-off benefits such as property sales fell to $0.7 million from $1.7 million, but Quarto kept its dividend at 3.35 pence (5.63 cents) and said it expects to meet its expectations for the full year.

Revenue excluding disposals was down by 3% due to the collapse of HDA, which used to distribute Quarto's books to the home improvement store Lowe's Cos (LOW), and weaker sales to books-focused stores.

Chief Executive Marcus Leaver said in an interview with Dow Jones Newswires that Quarto reacted to HDA's collapse by distributing books to Lowes itself and that there could be scope for the company to do this in other parts of the business. He added that while sales to book stores were disappointing, most Quarto titles are sold in non-book stores such as Lowes.

Quarto's international co-editions division, which publishes successful English language books in other languages, was a bright spot, with sales rising to $12.6 million from $10.7 million. Quarto recently launched a joint venture in Brazil and Mr. Leaver said the company is exploring similar ventures in markets such as China and the Middle East.

He added that trading is improving at the publisher's Australia and New Zealand display marketing business which sells books in workplaces, and that the company will consider selling the unit when the turnaround is complete in order to focus on publishing. Quarto would also consider acquisitions, but only small ones, he added.

Shares at 1110 GMT, down 13 pence, or 8.3%, at 139 pence valuing the company at GBP27.4 million.

Write to Rory Gallivan at rory.gallivan@wsj.com; Twitter: @RoryGallivan

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